Opposition to Watauga Orthopedics Surgery Center By Holston

Opposition to Watauga Orthopedics Surgery Center By Holston Valley Ambulatory Surgery Center

Holston Valley Ambulatory Surgery Center • Ownership • JV entity with USPI and Ballad • Area physicians, including Watauga • Decision to Oppose Watauga • • Vote at board level Both Ballad and Watauga abstained Remaining board members voted to oppose Motion to oppose approved

Watauga Orthopaedics Surgery Center Application Criteria × Need × Economic Feasibility × Contribution to Orderly Development ü Quality

Project is Not Needed ASTC Operating Room Utilization: 2019 ASTC #ORs # Cases per OR % of Meeting Minimum Capacity (884 cases) Bristol SC 4 286 32. 3% Kingsport ASC 4 334 37. 8% Holston Valley SC 4 798 90. 2% Renaissance SC 2 424 * 48. 0% Meadowview ASC 3 N/A ** - East Tennessee ASC 4 367 41. 5% Mountain Empire SC 4 1, 256 142. 1% Multi-Specialty Total 25 620 *** 70. 1% * Based on 2018 data **Licensed in 2020 ***Based on 22 ORs

Population is Not Growing in PSA Demographic Total Population Variable/Geographic Current Year (2020) Projected Year (2024) % Change Area Sullivan County 156, 573 155, 989 -0. 37% Carter County Greene County Hawkins County Washington County PSA Total State of TN Total 55, 912 69, 598 56, 606 132, 269 470, 958 6, 883, 347 55, 121 70, 287 56, 365 136, 545 474, 307 7, 097, 353 Source: Certificate of Need Application – Watauga Orthopaedics Surgery Center (CN 2007 -022) -1. 41% 0. 99% -0. 43% 3. 23% 0. 71% 3. 11%

Project is Not Economically Feasible • Factors to Consider: • Are proposed project costs reasonable? NO • Are there less costly or more effective alternative methods to provide benefits intended? YES • Project Costs: • Over 25, 000 square feet: $47. 82/square foot • Cost: $17, 318, 907 • 4 ORs + shelled space for 2 = total of 6 • More Effective Alternative Methods: • Significant ASC capacity available in service area – 620 Cases/OR in service area (which includes their current cases)

Project Does Not Contribute to Orderly Development of Health Care • Significant Adverse Impact on Holston Valley (as well as other ASCs) • Holston Valley ASC: 798 cases/OR (2019) – 90. 2 % of minimum • Watauga performed 1, 151 cases at Holston Valley ASC • 1, 151/3, 190 = 36% of TOTAL cases at Holston Valley ASC • ALL CASES moved = 509. 8 cases/OR = 57. 7% of minimum • 80% of CASES moved = 567. 3 cases/OR = 64. 2% of minimum

Project Does Not Contribute to Orderly Development of Health Care • No cost savings to Patients • Almost 80% of Watauga projected cases currently being done at area ASTCs • Patients already benefitting from lower cost setting of ASTCs • Plenty of excess capacity at area ASTCs to handle additional cases projected

Impact to Service Area ASTCs • Population is not growing in the service area • No population growth means surgeries would be coming from other providers • ASTCs • Hospitals • Applicant Projects 3, 800 cases year 1 • Applicant currently performing over 3, 000 at Holston Valley and Mountain Empire combined • Cases per OR in Existing ASTCS = 455/OR (without those 3, 000) • Addition of Watauga adds ORs and only 800 cases=531. 2/OR • Criteria NOT met

Bruce Miller, MD Orthopaedic Surgery, Holston Valley ASC

Dr. Miller • Merger of 2 hospital systems that became Ballad • Result Kingsport ASC temporarily closed – license in inactive status

Options for Watauga • Continue to provide surgeries at Holston Valley – significant capacity • Increase ownership interest in Holston Valley (turned down offer) • Reopen King’s Daughters (Watauga voted to consolidate ASTCs): 4 ORs • Cost = 0 • Physician ownership available • Add 2 ORs to Holston Valley – space already shelled in • Cost = $1. 5 M • Add 1 OR to Mountain Empire – new space • Cost = $3. 0 M 7 ORs = $4. 5 M versus 4 ORs (+2 shelled) = $17. 3 M

Request • DENY application • BUT if you think you should approve • Reduce ORs • Limit ownership to owners who applied – Watauga Orthopedics PLC